Equity

12 Months Ended

Dec. 31, 2012

Equity

12.    Equity

The Merck certificate of incorporation authorizes 6,500,000,000 shares of common stock and 20,000,000 shares of preferred stock. Of the authorized shares of preferred stock, there was a series of 11,500,000 shares which was designated as 6% mandatory convertible preferred stock.

Capital Stock

A summary of common stock and treasury stock transactions (shares in millions) is as follows:

	2012					2011					2010
	Common		Treasury			Common		Treasury			Common		Treasury
	Stock		Stock			Stock		Stock			Stock		Stock
Balance January 1		3,577		536			3,577		495			3,563		454
Purchases of treasury stock		—		62			—		58			—		47
Issuances (1)		—		(48	)		—		(17	)		10		(6	)
Mandatory conversion of 6% convertible preferred stock (2)		—		—			—		—			4		—
Balance December 31		3,577		550			3,577		536			3,577		495

⁽¹⁾  Issuances primarily reflect activity under share-based compensation plans.

⁽²⁾  In 2010, the remaining outstanding 6% mandatory convertible preferred stock not converted in connection with the Merger automatically converted by its terms into the right to receive cash and shares of Merck common stock. As a result of the conversion, approximately $72 million was paid to the holders and approximately 4 million Merck common shares were issued.

Noncontrolling Interests

In connection with the 1998 restructuring of AMI, Merck assumed $2.4 billion par value preferred stock with a dividend rate of 5% per annum, which is carried by KBI and included in Noncontrolling interests. If AstraZeneca exercises its option to acquire Merck’s interest in AZLP (see Note 9) this preferred stock obligation will be retired.